##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 001-14429
 SKECHERS U.S.A., INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    95-4376145(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)228 Manhattan Beach Blvd.Manhattan Beach, California
    
    90266(Address of Principal Executive Office)
    
    (Zip Code)
 (310) 318-3100
(Registrants Telephone Number, Including Area Code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
 o þ




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##### 



SKECHERS U.S.A., INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (Unaudited):Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 6. Exhibits
    
    
    27Signatures
    
    
    28Exhibit 10.1Exhibit 10.1(a)Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 31.1Exhibit 31.2Exhibit 32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 KECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)
(In thousands)
 June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    273,266
    
    
    $
    265,675Short-term investments
    
    
    0
    
    
    
    30,000Trade accounts receivable, net
    
    
    304,992
    
    
    
    219,924Other receivables
    
    
    7,526
    
    
    
    12,177Total receivables
    
    
    312,518
    
    
    
    232,101Inventories
    
    
    219,360
    
    
    
    224,050Prepaid expenses and other current assets
    
    
    30,012
    
    
    
    28,233Deferred tax assets
    
    
    8,950
    
    
    
    8,950Total current assets
    
    
    844,106
    
    
    
    789,009Property and equipment, at cost, less accumulated depreciation and amortization
    
    
    236,709
    
    
    
    171,667Intangible assets, less accumulated amortization
    
    
    8,147
    
    
    
    9,011Deferred tax assets
    
    
    13,667
    
    
    
    13,660Other assets, at cost
    
    
    33,213
    
    
    
    12,205TOTAL ASSETS
    
    $
    1,135,842
    
    
    $
    995,552LIABILITIES AND EQUITYCurrent Liabilities:Short-term borrowings
    
    $
    1,956
    
    
    $
    2,006Current installments of long-term borrowings
    
    
    15,899
    
    
    
    529Accounts payable
    
    
    191,653
    
    
    
    196,163Accrued expenses
    
    
    22,142
    
    
    
    31,843Total current liabilities
    
    
    231,650
    
    
    
    230,541Long-term borrowings, excluding current installments
    
    
    14,532
    
    
    
    15,641Total liabilities
    
    
    246,182
    
    
    
    246,182Commitments and contingenciesEquity:Preferred Stock, $.001 par value; 10,000 authorized; none issued and outstanding
    
    
    0
    
    
    
    0Class A Common Stock, $.001 par value; 100,000 shares authorized; 36,204 and
34,229 shares issued and outstanding at June 30, 2010 and December 31,
2009, respectively respectively
    
    
    36
    
    
    
    34Class B Common Stock, $.001 par value; 100,000 shares authorized; 11,346 and
12,360 shares issued and outstanding at June 30, 2010 and December 31,
2009, respectively respectively
    
    
    11
    
    
    
    13Additional paid-in capital
    
    
    295,857
    
    
    
    272,662Accumulated other comprehensive income (loss)
    
    
    (1,067
    )
    
    
    9,348Retained earnings
    
    
    560,398
    
    
    
    463,865Skechers U.S.A., Inc. equity
    
    
    855,235
    
    
    
    745,922Noncontrolling interests
    
    
    34,425
    
    
    
    3,448Total equity
    
    
    889,660
    
    
    
    749,370TOTAL LIABILITIES AND EQUITY
    
    $
    1,135,842
    
    
    $
    995,552
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##### Table of Contents



SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(Unaudited)
(In thousands, except per share data)
 Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    504,859
    
    
    $
    298,976
    
    
    $
    997,623
    
    
    $
    642,446Cost of sales
    
    
    267,214
    
    
    
    176,373
    
    
    
    522,560
    
    
    
    394,414Gross profit
    
    
    237,645
    
    
    
    122,603
    
    
    
    475,063
    
    
    
    248,032Royalty income
    
    
    875
    
    
    
    332
    
    
    
    1,260
    
    
    
    604238,520
    
    
    
    122,935
    
    
    
    476,323
    
    
    
    248,636Operating expenses:Selling
    
    
    52,437
    
    
    
    34,813
    
    
    
    86,746
    
    
    
    56,323General and administrative
    
    
    127,299
    
    
    
    95,848
    
    
    
    249,786
    
    
    
    193,886179,736
    
    
    
    130,661
    
    
    
    336,532
    
    
    
    250,209Earnings (loss) from operations
    
    
    58,784
    
    
    
    (7,726
    )
    
    
    139,791
    
    
    
    (1,573
    )Other income (expense):Interest income
    
    
    436
    
    
    
    581
    
    
    
    1,864
    
    
    
    1,290Interest expense
    
    
    (118
    )
    
    
    (912
    )
    
    
    (833
    )
    
    
    (957
    )Other, net
    
    
    1,611
    
    
    
    245
    
    
    
    1,820
    
    
    
    271,929
    
    
    
    (86
    )
    
    
    2,851
    
    
    
    360Earnings (loss) before income taxes (benefit)
    
    
    60,713
    
    
    
    (7,812
    )
    
    
    142,642
    
    
    
    (1,213
    )Income tax expense (benefit)
    
    
    20,396
    
    
    
    (1,186
    )
    
    
    46,202
    
    
    
    (1,939
    )Net earnings (loss)
    
    
    40,317
    
    
    
    (6,626
    )
    
    
    96,440
    
    
    
    726Less: Net earnings (loss) attributable to noncontrolling
interests
    
    
    80
    
    
    
    (699
    )
    
    
    (93
    )
    
    
    (1,567
    )Net earnings (loss) attributable to Skechers U.S.A., Inc.
    
    $
    40,237
    
    
    $
    (5,927
    )
    
    $
    96,533
    
    
    $
    2,293Net earnings (loss) per share attributable to Skechers
U.S.A., Inc.:Basic
    
    $
    0.85
    
    
    $
    (0.13
    )
    
    $
    2.05
    
    
    $
    0.05Diluted
    
    $
    0.82
    
    
    $
    (0.13
    )
    
    $
    1.97
    
    
    $
    0.05Weighted average shares used in calculating earnings (loss)
per share attributable to Skechers U.S.A., Inc.:Basic
    
    
    47,422
    
    
    
    46,282
    
    
    
    47,107
    
    
    
    46,252Diluted
    
    
    49,130
    
    
    
    46,282
    
    
    
    48,955
    
    
    
    46,424Comprehensive income:Net earnings (loss)
    
    $
    40,237
    
    
    $
    (5,927
    )
    
    $
    96,533
    
    
    $
    2,293Unrealized gain on marketable securities, net of tax
    
    
    0
    
    
    
    10,234
    
    
    
    0
    
    
    
    8,151Gain (loss) on foreign currency translation adjustment, net
of tax
    
    
    (6,147
    )
    
    
    6,836
    
    
    
    (10,415
    )
    
    
    3,874Total comprehensive income
    
    $
    34,090
    
    
    $
    11,143
    
    
    $
    86,118
    
    
    $
    14,318
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
(In thousands)
 Six-Months Ended June 30,2010
    
    
    2009Cash flows from operating activities:Net earnings
    
    $
    96,533
    
    
    $
    2,293Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:Noncontrolling interest in subsidiaries
    
    
    (93
    )
    
    
    (1,567
    )Depreciation of property and equipment
    
    
    10,870
    
    
    
    9,337Amortization of deferred financing costs
    
    
    741
    
    
    
    0Amortization of intangible assets
    
    
    892
    
    
    
    410Provision (recoveries) for bad debts and returns
    
    
    3,135
    
    
    
    (352
    )Tax benefits from stock-based compensation
    
    
    0
    
    
    
    0Non-cash stock compensation
    
    
    6,665
    
    
    
    1,210Loss on disposal of property and equipment
    
    
    50
    
    
    
    2Deferred taxes
    
    
    (12
    )
    
    
    (605
    )Impairment of property and equipment
    
    
    0
    
    
    
    761(Increase) decrease in assets:Receivables
    
    
    (91,260
    )
    
    
    (17,288
    )Inventories
    
    
    3,718
    
    
    
    71,199Prepaid expenses and other current assets
    
    
    (2,215
    )
    
    
    (548
    )Other assets
    
    
    (22,555
    )
    
    
    (1,357
    )Increase (decrease) in liabilities:Accounts payable
    
    
    (5,058
    )
    
    
    11,012Accrued expenses
    
    
    (9,381
    )
    
    
    (6,173
    )Net cash provided by (used in) operating activities
    
    
    (7,970
    )
    
    
    68,334Cash flows from investing activities:Capital expenditures
    
    
    (29,721
    )
    
    
    (26,860
    )Maturities of investments
    
    
    30,000
    
    
    
    375Redemption of auction rate securities
    
    
    0
    
    
    
    95,250Intangible additions
    
    
    (31
    )
    
    
    0Net cash provided by investing activities
    
    
    248
    
    
    
    68,765Cash flows from financing activities:Net proceeds from the issuances of stock through employee stock
purchase plan and the exercise of stock options
    
    
    10,772
    
    
    
    958Payments on long-term debt
    
    
    (281
    )
    
    
    (166
    )Increase (decrease) in short-term borrowings
    
    
    (61
    )
    
    
    639Capital contribution from noncontrolling interest of consolidated entity
    
    
    1,000
    
    
    
    3,000Excess tax benefits from stock-based compensation
    
    
    5,758
    
    
    
    Net cash provided by financing activities
    
    
    17,188
    
    
    
    4,431Net increase in cash and cash equivalents
    
    
    9,466
    
    
    
    141,530Effect of exchange rates on cash and cash equivalents
    
    
    (1,875
    )
    
    
    553Cash and cash equivalents at beginning of the period
    
    
    265,675
    
    
    
    114,941Cash and cash equivalents at end of the period
    
    $
    273,266
    
    
    $
    257,024Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    1,512
    
    
    $
    1,978Income taxes
    
    
    53,343
    
    
    
    1,030Non-cash transactions:Land contribution from noncontrolling interest of consolidated entity
    
    
    30,000
    
    
    
    0Note payable contribution from noncontrolling interest of consolidated entity
    
    
    14,567
    
    
    
    0
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SKECHERS U.S.A., INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010 and 2009
(Unaudited)
 (1) GENERAL
 Basis of Presentation
   Use of Estimates
  Noncontrolling interests
   June 30, 2010
    
    
    December 31, 2009Current assets
    
    $
    4,178
    
    
    $
    0Noncurrent assets
    
    
    75,990
    
    
    
    0Total assets
    
    $
    80,168
    
    
    $
    0Current liabilities
    
    $
    5,584
    
    
    $
    0Noncurrent liabilities
    
    
    14,567
    
    
    
    0Total liabilities
    
    $
    20,151
    
    
    $
    0
 6




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Recent accounting pronouncements
 Amendments to FASB Interpretation No. 46(R)
 (2) INVESTMENTS
  (3) REVENUE RECOGNITION
   (4) OTHER COMPREHENSIVE INCOME
   Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,Diluted earnings (loss) per share
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net earnings (loss)
    
    $
    40,317
    
    
    $
    (6,626
    )
    
    $
    96,440
    
    
    $
    726Unrealized gain on marketable securities, net of tax
    
    
    0
    
    
    
    10,234
    
    
    
    0
    
    
    
    8,151Income (loss) on foreign currency translation
adjustment, net of tax
    
    
    (6,120
    )
    
    
    6,881
    
    
    
    (10,350
    )
    
    
    3,899Comprehensive income
    
    
    34,197
    
    
    
    10,489
    
    
    
    86,090
    
    
    
    12,776Comprehensive income (loss) attributable to
noncontrolling interest
    
    
    (107
    )
    
    
    (654
    )
    
    
    28
    
    
    
    (1,542
    )Comprehensive income attributable to parent
    
    $
    34,090
    
    
    $
    11,143
    
    
    $
    86,118
    
    
    $
    14,318
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(5)
    
    STOCK COMPENSATION   WEIGHTED
    
    WEIGHTED AVERAGE
    
    AGGREGATEAVERAGE
    
    REMAINING
    
    INTRINSICSHARES
    
    EXERCISE  PRICE
    
    CONTRACTUAL TERM
    
    VALUEOutstanding at December 31, 2009
    
    
    1,505,694
    
    
    $
    12.01Granted
    
    
    0
    
    
    
    0Exercised
    
    
    (838,283
    )
    
    
    12.56Cancelled
    
    
    (24,791
    )
    
    
    3.94Outstanding at June 30, 2010
    
    
    642,620
    
    
    
    11.61
    
    
    1.9 years
    
    $
    16,008,636Exercisable at June 30, 2010
    
    
    642,620
    
    
    
    11.61
    
    
    1.9 years
    
    $
    16,008,636
  WEIGHTED AVERAGEGRANT-DATE FAIRSHARES
    
    VALUENonvested at December 31, 2009
    
    
    2,158,644
    
    
    $
    17.86Granted
    
    
    129,000
    
    
    
    30.96Vested
    
    
    (102,644
    )
    
    
    17.06Cancelled
    
    
    0
    
    
    
    0Nonvested at June 30, 2010
    
    
    2,185,000
    
    
    
    18.67
  (6) EARNINGS PER SHARE
   Three-Months Ended June 30,
    
    Six-Months Ended June 30,Basic earnings (loss) per share
    
    2010
    
    2009
    
    2010
    
    2009Net earnings (loss) attributable to
Skechers U.S.A., Inc.
    
    $
    40,237
    
    
    $
    (5,927
    )
    
    $
    96,533
    
    
    $
    2,293Weighted average common shares outstanding
    
    
    47,422
    
    
    
    46,282
    
    
    
    47,107
    
    
    
    46,252Basic earnings (loss) per share
attributable to Skechers U.S.A., Inc.
    
    $
    0.85
    
    
    $
    (0.13
    )
    
    $
    2.05
    
    
    $
    0.05
 8




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Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,Diluted earnings (loss) per share
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net earnings (loss) attributable to Skechers U.S.A., Inc.
    
    $
    40,237
    
    
    $
    (5,927
    )
    
    $
    96,533
    
    
    $
    2,293Weighted average common shares outstanding
    
    
    47,422
    
    
    
    46,282
    
    
    
    47,107
    
    
    
    46,252Dilutive effect of stock options
    
    
    1,708
    
    
    
    0
    
    
    
    1,848
    
    
    
    172Weighted average common shares outstanding
    
    
    49,130
    
    
    
    46,282
    
    
    
    48,955
    
    
    
    46,424Diluted earnings (loss) per share attributable to Skechers
U.S.A., Inc.
    
    $
    0.82
    
    
    $
    (0.13
    )
    
    $
    1.97
    
    
    $
    0.05
  (7) INCOME TAXES
    (8) LINE OF CREDIT AND SHORT-TERM BORROWINGS
  9




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(9) LITIGATION
  Asics Corporation and Asics America Corporation v. Skechers USA, Inc.
 Tamara Grabowski v. Skechers USA, Inc Grabowski
 Sonia Stalker v. Skechers USA, Inc.  Grabowski
 10




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(10) STOCKHOLDERS EQUITY
   Six-Months Ended June 30,2010
    
    
    2009Noncontrolling interest, January 1
    
    $
    3,448
    
    
  $
    3,199Net loss attributable to noncontrolling interest
    
    
    (88
    )
    
    
    (1,567
    )Foreign currency translation adjustment
    
    
    65
    
    
    
    25Capital contribution by noncontrolling interest
    
    
    31,000
    
    
    
    3,000Noncontrolling interest, June 30
    
    $
    34,425
    
    
    $
    4,657
 (11) SEGMENT AND GEOGRAPHIC REPORTING INFORMATION
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net salesDomestic wholesale
    
    $
    317,788
    
    
    $
    160,890
    
    
    $
    591,747
    
    
    $
    341,389International wholesale
    
    
    77,779
    
    
    
    61,490
    
    
    
    201,128
    
    
    
    161,040Retail
    
    
    102,344
    
    
    
    72,252
    
    
    
    189,586
    
    
    
    132,292E-commerce
    
    
    6,948
    
    
    
    4,344
    
    
    
    15,162
    
    
    
    7,725Total
    
    $
    504,859
    
    
    $
    298,976
    
    
    $
    997,623
    
    
    $
    642,446
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Gross profitDomestic wholesale
    
    $
    134,643
    
    
    $
    55,881
    
    
    $
    257,983
    
    
    $
    112,387International wholesale
    
    
    32,017
    
    
    
    20,258
    
    
    
    86,003
    
    
    
    53,846Retail
    
    
    67,331
    
    
    
    44,091
    
    
    
    123,113
    
    
    
    77,664E-commerce
    
    
    3,654
    
    
    
    2,373
    
    
    
    7,964
    
    
    
    4,135Total
    
    $
    237,645
    
    
    $
    122,603
    
    
    $
    475,063
    
    
    $
    248,032
 June 30, 2010
    
    
    December 31, 2009Identifiable assetsDomestic wholesale
    
    $
    850,540
    
    
    $
    712,712International wholesale
    
    
    181,330
    
    
    
    192,085Retail
    
    
    103,719
    
    
    
    90,049E-commerce
    
    
    253
    
    
    
    706Total
    
    $
    1,135,842
    
    
    $
    995,552
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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Additions to property and equipmentDomestic wholesale
    
    $
    15,409
    
    
    $
    5,488
    
    
    $
    16,742
    
    
    $
    19,227International wholesale
    
    
    2,154
    
    
    
    1,599
    
    
    
    2,592
    
    
    
    3,093Retail
    
    
    5,509
    
    
    
    3,367
    
    
    
    10,387
    
    
    
    4,540Total
    
    $
    23,072
    
    
    $
    10,454
    
    
    $
    29,721
    
    
    $
    26,860
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales (1)United States
    
    $
    416,122
    
    
    $
    230,115
    
    
    $
    776,833
    
    
    $
    470,406Canada
    
    
    11,851
    
    
    
    6,552
    
    
    
    27,875
    
    
    
    15,945Other international (2)
    
    
    76,886
    
    
    
    62,309
    
    
    
    192,915
    
    
    
    156,095Total
    
    $
    504,859
    
    
    $
    298,976
    
    
    $
    997,623
    
    
    $
    642,446
 June 30, 2010
    
    
    December 31, 2009Long-lived assetsUnited States
    
    $
    221,212
    
    
    $
    160,444Canada
    
    
    931
    
    
    
    866Other international (2)
    
    
    14,566
    
    
    
    10,357Total
    
    $
    236,709
    
    
    $
    171,667
 
 (1)
    
    The Company has subsidiaries in Canada, United Kingdom, Germany, France, Spain, Italy,
Netherlands, Brazil, and Chile that generate net sales within those respective countries and
in some cases the neighboring regions. The Company has joint ventures in China, Hong Kong,
Malaysia, Singapore, and Thailand that generate net sales from those countries. The Company
also has a subsidiary in Switzerland that generates net sales from Switzerland in addition to
net sales to our distributors located in numerous non-European countries. Net sales are
attributable to geographic regions based on the location of the Company subsidiary.(2)
    
    Other international consists of Switzerland, United Kingdom, Germany, France, Spain, Italy,
Netherlands, China, Hong Kong, Malaysia, Singapore, Thailand, Brazil and Chile. (12) BUSINESS AND CREDIT CONCENTRATIONS
  12




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##### Table of Contents



Three Months Ended June 30,
    
    Six Months Ended June 30,2010
    
    2009
    
    2010
    
    2009Manufacturer #1
    
    
    36.8
    %
    
    
    29.7
    %
    
    
    34.6
    %
    
    
    26.3
    %Manufacturer #2
    
    
    14.2
    %
    
    
    12.4
    %
    
    
    13.3
    %
    
    
    11.3
    %Manufacturer #3
    
    
    9.4
    %
    
    
    11.3
    %
    
    
    10.1
    %
    
    
    11.0
    %Manufacturer #4
    
    
    8.1
    %
    
    
    10.8
    %
    
    
    8.6
    %
    
    
    10.2
    %Manufacturer #5
    
    
    4.6
    %
    
    
    7.2
    %
    
    
    4.7
    %
    
    
    7.3
    %73.1
    %
    
    
    71.4
    %
    
    
    71.3
    %
    
    
    66.1
    %
  13




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    international, national and local general economic, political and market conditions,
including the recent global economic slowdown and financial crisis;
 
    
    entry into the highly competitive performance footwear market;
 
    
    sustaining, managing and forecasting our costs and proper inventory levels;
 
    
    losing any significant customers, decreased demand by industry retailers and
cancellation of order commitments due to the lack of popularity of particular designs
and/or categories of our products;
 
    
    maintaining our brand image and intense competition among sellers of footwear for
consumers;
 
    
    anticipating, identifying, interpreting or forecasting changes in fashion trends,
consumer demand for the products and the various market factors described above;
 
    
    sales levels during the spring, back-to-school and holiday selling seasons; and
 
    
    other factors referenced or incorporated by reference in our companys annual report
on Form 10-K for the year ended December 31, 2009.
    14




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##### Table of Contents



Three-Months Ended June 30,2010
    
    2009Percentage of revenues by segmentDomestic wholesale
    
    
    62.9
    %
    
    
    53.8
    %International wholesale
    
    
    15.4
    %
    
    
    20.6
    %Retail
    
    
    20.3
    %
    
    
    24.2
    %E-commerce
    
    
    1.4
    %
    
    
    1.4
    %Total
    
    
    100
    %
    
    
    100
    %
     Three-Months Ended June 30,
    
    
    Six-Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    504,859
    
    
    
    100.0
    %
    
    $
    298,976
    
    
    
    100.0
    %
    
    $
    997,623
    
    
    
    100.0
    %
    
    $
    642,446
    
    
    
    100.0
    %Cost of sales
    
    
    267,214
    
    
    
    52.9
    
    
    
    176,373
    
    
    
    59.0
    
    
    
    522,560
    
    
    
    52.4
    
    
    
    394,414
    
    
    
    61.4Gross profit
    
    
    237,645
    
    
    
    47.1
    
    
    
    122,603
    
    
    
    41.0
    
    
    
    475,063
    
    
    
    47.6
    
    
    
    248,032
    
    
    
    38.6Royalty income
    
    
    875
    
    
    
    0.1
    
    
    
    332
    
    
    
    0.1
    
    
    
    1,260
    
    
    
    0.1
    
    
    
    604
    
    
    
    0.1238,520
    
    
    
    47.2
    
    
    
    122,935
    
    
    
    41.1
    
    
    
    476,323
    
    
    
    47.7
    
    
    
    248,636
    
    
    
    38.7Operating expenses:Selling
    
    
    52,437
    
    
    
    10.4
    
    
    
    34,813
    
    
    
    11.6
    
    
    
    86,746
    
    
    
    8.7
    
    
    
    56,323
    
    
    
    8.8General and administrative
    
    
    127,299
    
    
    
    25.2
    
    
    
    95,848
    
    
    
    32.1
    
    
    
    249,786
    
    
    
    25.0
    
    
    
    193,886
    
    
    
    30.1179,736
    
    
    
    35.6
    
    
    
    130,661
    
    
    
    43.7
    
    
    
    336,532
    
    
    
    33.7
    
    
    
    250,209
    
    
    
    38.9Earnings (loss) from operations
    
    
    58,784
    
    
    
    11.6
    
    
    
    (7,726
    )
    
    
    (2.6
    )
    
    
    139,791
    
    
    
    14.0
    
    
    
    (1,573
    )
    
    
    (0.2
    )Interest income
    
    
    436
    
    
    
    0.1
    
    
    
    581
    
    
    
    0.2
    
    
    
    1,864
    
    
    
    0.2
    
    
    
    1,290
    
    
    
    0.2Interest expense
    
    
    (118
    )
    
    
    0
    
    
    
    (912
    )
    
    
    (0.3
    )
    
    
    (833
    )
    
    
    (0.1
    )
    
    
    (957
    )
    
    
    (0.2
    )Other, net
    
    
    1,611
    
    
    
    0.3
    
    
    
    245
    
    
    
    0.1
    
    
    
    1,820
    
    
    
    0.2
    
    
    
    27
    
    
    
    0Earnings (loss) before income taxes
    
    
    60,713
    
    
    
    12.0
    
    
    
    (7,812
    )
    
    
    (2.6
    )
    
    
    142,642
    
    
    
    14.3
    
    
    
    (1,213
    )
    
    
    (0.2
    )Income tax expense (benefit)
    
    
    20,396
    
    
    
    4.0
    
    
    
    (1,186
    )
    
    
    (0.4
    )
    
    
    46,202
    
    
    
    4.6
    
    
    
    (1,939
    )
    
    
    (0.3
    )Net earnings (loss)
    
    
    40,317
    
    
    
    8.0
    
    
    
    (6,626
    )
    
    
    (2.2
    )
    
    
    96,440
    
    
    
    9.7
    
    
    
    726
    
    
    
    0.1Less: Net income (loss)
attributable to noncontrolling
interests
    
    
    80
    
    
    
    0
    
    
    
    (699
    )
    
    
    (0.2
    )
    
    
    (93
    )
    
    
    0
    
    
    
    (1,567
    )
    
    
    (0.2
    )Net earnings (loss)
attributable to Skechers
U.S.A., Inc.
    
    $
    40,237
    
    
    
    8.0
    %
    
    $
    (5,927
    )
    
    
    (2.0
    )%
    
    $
    96,533
    
    
    
    9.7
    %
    
    $
    2,293
    
    
    
    0.3
    %
 15




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Net sales
      Gross profit
  16




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Selling expenses
   General and administrative expenses
   17




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Interest income
  Interest expense
  Income taxes
   Noncontrolling interest in net income and loss of consolidated subsidiaries
   Net sales
   18




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Gross profit
    19




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Selling expenses
  General and administrative expenses
  Interest income
  Interest expense
  Income taxes
   Noncontrolling interest in net income and loss of consolidated subsidiaries
  20




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21




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22




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Amendments to FASB Interpretation No. 46(R)
        23




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest rate fluctuations
 Foreign exchange rate fluctuations
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
    24




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  We Depend Upon A Relatively Small Group Of Customers For A Large Portion Of Our Sales.
  25




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We Rely On Independent Contract Manufacturers And, As A Result, Are Exposed To Potential
Disruptions In Product Supply.
   One Principal Stockholder Is Able To Exert Significant Influence Over All Matters Requiring A Vote
Of Our Stockholders And His Interests May Differ From The Interests Of Our Other Stockholders.
  26




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##### Table of Contents



ITEM 6.
    
    EXHIBITS
 ExhibitNumber
    
    Description10.1+
    
    Agreement dated April 23, 2010 between HF Logistics-SKX T1, LLC, which is
a wholly owned subsidiary of a joint venture entered into between HF
Logistics I, LLC and a wholly owned subsidiary of the Registrant, and J.
D. Diffenbaugh, Inc. regarding 29800 Eucalyptus Avenue, Rancho Belago,
California.10.1(a)
    
    General Conditions of the Contract for Construction regarding 29800
Eucalyptus Avenue, Rancho Belago, California.10.2+
    
    Construction Loan Agreement dated as of April 30, 2010, by and among HF
Logistics-SKX T1, LLC, which is a wholly owned subsidiary of a joint
venture entered into between HF Logistics I, LLC and a wholly owned
subsidiary of the Registrant, Bank of America, N.A., as administrative
agent and as a lender, and Raymond James Bank FSB, as a lender.10.3
    
    Lease Agreement dated May 20, 2008 between Skechers EDC SPRL, a
subsidiary of the Registrant, and ProLogis Belgium III SPRL, regarding
ProLogis Park Liege Distribution Center II in Liege, Belgium.10.4
    
    Addendum to Lease Agreement dated May 20, 2008 between Skechers EDC SPRL,
a subsidiary of the Registrant, and ProLogis Belgium III SPRL, regarding
ProLogis Park Liege Distribution Center II in Liege, Belgium.10.5**
    
    Amendment No. 1 to 2008 Employee Stock Purchase Plan.31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1***
    
    Certification of the Chief Executive Officer and the Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 +
    
    The Company has applied with the Secretary of the Securities and Exchange Commission for
confidential treatment of certain information pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934. The Company has filed separately with its application a copy of the
exhibit including all confidential portions, which may be made available for public inspection
pending the Securities and Exchange Commissions review of the application in accordance with
Rule 24b-2.**
    
    Management contract or compensatory plan or arrangement required to be filed as an exhibit.***
    
    In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed
filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the
liability of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act. 27




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SIGNATURES
  Date: August 6, 2010
    SKECHERS U.S.A., INC.By:
    /S/ DAVID WEINBERGDavid WeinbergChief Financial Officer 28